Vacancies increased in central business district (CBD) offices in Seoul, but rents rose.
On the 12th, according to R Square, a commercial real estate service corporations, the average vacancy rate for Seoul offices in the second quarter was 6.5%, up 0.4 percentage points (p) from the previous quarter. During this period, a total of 11 offices, with a total floor area of about 99,000 pyeong, were newly supplied.
The rise in Seoul's average vacancy rate was led by the CBD, where more than 60% of new supply was concentrated. About 61,642 pyeong, including "G1 Seoul (43,388 pyeong)" and "Rene Square (12,587 pyeong)," came on line, and the area's vacancy rate rose 2.4 percentage points from the previous quarter to 7.3%.
In the leasing market, demand varied by asset size. In the Gangnam business district (GBD), vacancy rates for extra-large and large offices were just 0.3% and 2.2%, respectively, as the prime office preference "flight to quality (Flight to Quality)" continued. In the CBD, the average rent for large offices rose 8.5% from a year earlier, the biggest increase in the area.
In the investment market, the scale of transactions expanded. In the second quarter, office transaction value in Seoul and Bundang was about 6 trillion won, about 1.7 times higher than 3.5 trillion won in the previous quarter. The average price per pyeong fell 11.1% from the previous quarter to 27.19 million won. R Square analyzed that the average price per pyeong fell as the share of non-core asset transactions increased.
In the Yeouido business district (YBD), major records were set in terms of transaction scale and price. "IFC office building" transacted for about 192.78 billion won, marking the largest quarterly transaction, and "Hana Securities Yeouido headquarters" transacted for about 811.2 billion won, or 38.4 million won per pyeong, setting a new all-time high price per pyeong for YBD offices.
Lee Sang-jun, head of the big data consulting division, said, "In the second half, the transaction trend centered on high-quality assets will continue," and noted, "Assets with strong locational competitiveness and stable cash flow, or assets with strong physical specifications and value-add potential, are likely to see transactions concluded."